Download - 1 1 TITAN INDUSTRIES LIMITED 12 February 2008 ‘Delivering value by creating desirable brands’
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TITAN INDUSTRIES LIMITED
12 February 2008
‘Delivering value by creating desirable brands’
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DisclaimerCertain statements are included in this release which contain words or phrases such as “will,” “aim,” “will likely result,” “believe,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “contemplate,” “seek to,” “future,” “objective,” “goal,” “project,” “should,” “will pursue” and similar expressions or variations of these expressions that are “forward-looking statements.” Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to implement our strategy successfully, the market acceptance of and demand for our products, our growth and expansion, the adequacy of our allowance for credit to franchisees, dealers and distributors, technological changes, volatility in income, cash flow projections and our exposure to market and operational risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may actually occur in the future. As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated. In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: general economic and political conditions in India and the other countries which have an impact on our business activities; inflation, unanticipated turbulence in interest rates, foreign exchange rates, the prices of raw material including gold and diamonds, or other rates or prices; changes in Indian and foreign laws and regulations, including tax and accounting regulations; and changes in competition and the pricing environment in India. The Company may, from time to time make additional written and oral forward-looking statements, including statements contained in the Company’s filings with SEBI and the Stock Exchanges and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company, to reflect events or circumstances after the date thereof.
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Titan Industries
A Happening Company in a Happening India !
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Titan Industries
PioneerBreaker of rulesLeader in two businesses:premium and mass marketManufacturer,designer,brand owner,marketer , retailer and after-sales service providerUnique cultureFirst company to dare to challenge the SwissB2C and B2B playerIn four businesses from 2007-08One of the Jewels of the Tata Group
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Our Heritage – the TATA Group
Titan is a part of the TATA Group having a turnover of about USD 30 bn, equivalent to over 2.5% of India’s GDP and having the biggest market capitalization in India
The Tata group is India’s largest employer in the private sector – 222,000+ employees across 85 companies
The TATA group has achieved many Firsts for India: First private sector Steel mill First private sector Power utility First luxury hotel (Taj) First Airline (now Air India) The World’s least expensive car (Tata Nano) India’s largest software company (TCS) India’s largest watch & jewellery mfgr (Titan)
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About Us
Titan is the world’s sixth largest, integrated manufacturer-brand for watchesCommencing production in 1986-87, the Company is today the leader in the Watch & Jewellery businesses in India First & largest player in the branded jewellery segment
(Tanishq) >60% share of the organised watch market Over 90 million watches sold across 30 countries, cumulatively
Manufacturing Facilities Main Watch & Jewellery plants in Hosur near Bangalore
(India’s “Silicon Plateau”) Watch assembly plants at Dehradun, Baddi, and Roorkee.
ECB plant in Goa; Jewellery Plant at Dehradun Investment of US$150 million in a 450,000 sq.ft. state-of-the-
art facility Owned by Tata: 25.17% and TIDCO: 27.88%Professionally managed by TATA group & an independent Board
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Recognition and Awards in many categories
• The Watch Division won the coveted JRD QV (Malcolm Baldrige) Award in 2006.
• India’s most admired consumer durables company having the most trusted brand -TITAN.
• Both TITAN and TANISHQ adjudged most admired brands for the last 4 years.
• Adjudged Retail Company of the year.• Retail Asia and Media Award-Singapore, for Retailing and
preferred brands.• Being selected as “Domestic Dynamo” by BCG (based on
dynamism of the Company; competence of management)• Ideator Awards for Titan designers.• Best Corporate Citizen – Mother Teresa, Helen Keller,
Rotary and Chamber of Commerce Awards.• President of India Award for best employer of the physically
challenged.
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Eight Indian firms among S&P`s challengers to global majors
BS Reporter / New Delhi May 11, 2007
Eight Indian firms from industries as diverse as cement, hospitality, textiles and consumer goods are expected to emerge as challengers to the world’s leading blue chip companies, according to rating agency Standard & Poor’s (S&P) annual rating of global challengers
Market Cap ($million) ACC 4,590.91Siemens India 4,320.96Indian Hotels Co. 2,044.46Lakshmi Machine Works 1,004.50Titan Industries 861.56Marico 742.54Hotel Leela Venture 530.02Jain Irrigation Systems 505.19Source: S&P, m-cap as of Dec 31, 2006
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Our businesses
Watches
Jewellery
International Business
Precision Engineering
Currently Marketing
our Products in 26 countrieswith a larger
footprint in theMiddle East and
Asia-Pacificregions
Prescription Eyewear
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Our Brands
TITAN
SONATA
FASTRACK
XYLYS
TANISHQ
GOLD PLUS
TITAN EYE+
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THE THREE YEAR JOURNEY…INCOME
570655
784
0
200
400
600
800
1000
Inco
me
in R
s. C
r.
2004-05 2005-06 2006-07
Year
Watches
20%
1134
1481
2136
0
600
1200
1800
2400
Inco
me
in R
s. C
r.
2004-05 2005-06 2006-07
Year
Company
44%63%
535
791
1292
0
300
600
900
1200
1500
Inco
me
in R
s. C
r.
2004-05 2005-06 2006-07
Year
Jewellery
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THE THREE YEAR JOURNEY…CAPITAL EMPLOYED
368328 338
0
100
200
300
400
in R
s. C
r.
2004-05 2005-06 2006-07
Year
Watches
101
137
186
0
30
60
90
120
150
180
in R
s. C
r.
2004-05 2006-07 2006-07
Year
Jewellery
524 525592
0100200300400500600700
in R
s. C
r.
2004-05 2005-06 2006-07
Year
Company
13
32
87
132
0
20
40
60
80
100
120
140
PB
T -
Rs.
Cro
res
2004-05 2005-06 2006-07
PBT
THE THREE YEAR JOURNEY..
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Market Capitalisation (Rs. Cr.)
218500
1018
3530
4400
0
1000
2000
3000
4000
5000
2002-03 2003-04 2004-05 2005-06 2006-07
Market Cap.
Crossed
Billion $
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2006-07 – a year to remember..Financials Company Income crossed Rs 2000 Crore mark PBT crossed Rs 100 Crore mark Share price crossed Rs 1000 and Market cap crossed a billion dollars
Brands Brand Tanishq crossed Rs 1000 Crore mark Brand Titan crossed Rs 500 Crore mark Brand Sonata crossed Rs 300 Crore mark Brand Fastrack crossed Rs 100 Crore mark
Retailing World of Titan stores crossed 200 Retail space – added over 60,000 sq ft. Large format Flagship store – Rs 100 Crore in first year
New Businesses Expansion of Gold Plus and Precision Engineering Titan Eye + began its journey
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2007-08 PERFORMANCEFIRST NINE MONTHS
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PERFORMANCE – 2007-08 – FIRST NINE MONTHSINCOME
460536
641
0100200300400500600700
Inco
me
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Watches
20%
563
952
1497
0200400600800
10001200140016001800
Inco
me
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Jewellery
1048
1532
2206
0
400
800
1200
1600
2000
2400
Inco
me
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Company
44%57%
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PERFORMANCE – 2007-08 – FIRST NINE MONTHS
6961
75
0
15
30
45
60
75
90
PBT
in R
s Cr
2005-06 2006-07 2007-08
Year
Watches (EBIT)
+22%
28
68
82
0
15
30
45
60
75
90
PBT
in R
s Cr
2005-06 2006-07 2007-08
Year
Jewellery (EBIT)
48
93
132
020406080
100120140
PBT
in R
s Cr
2005-06 2006-07 2007-08
Year
Company (PBT)
+42%+20%
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PERFORMANCE – 2007-08 – FIRST NINE MONTHS CAPITAL EMPLOYED (END DECEMBER)
329354
313
050
100150200250300350
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Watches
146
195
338
050
100150200250300350
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Jewellery
560627
767
0100200300400500600700800
in R
s. C
r.
2005-06 2006-07 2007-08
Year
Company
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I Watch Business
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The Watch Market & Industry in India
India is an under-penetrated market for watches – only 27 % of Indians own a watch
Total estimated market as of 2007 Volume ~ 39 mn units & Value: Rs 2500 Crores (USD 625 Mn)
Vast proportion of the Indian market is below Rs 500 ~ 68% (85% by volume)
Market has been split into: Low end, Mass market, Premium,Luxury
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TITAN Citizen
Timex
Watch Market Map
Rs 500 1000 2000 4000 5000 30,000 +
Formal / Classic
Fashion/Sporty
Sonata, HMT,Maxima
Espirit, Swatch Fossil Giordano, DKNY, Carrera Tommy Hilfiger
Raymond WeilTissot
Omega,Rado, Longines
Tag Heuer Hugo BossC Dior
Price
Fastrack
XYLYS
10000
Nebula
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* Significant growth over the past three years * Rs. 746 Crores Sales during the latest financial year (over Rs 1000 crores at retail prices)
Profits
Consistent growth * PBT (2004/05) - Rs. 70 Crores * PBT (2005/06) - Rs. 90 Crores * PBT (2006/07) - Rs. 96 Crores
ROCE
ROCE exceeds Cost of Funds * ROCE (2004/05) - 39% * ROCE (2005/06) - 50% * ROCE (2006/07) - 50%
Revenues
ROCE
OUR WATCH BUSINESS – OVERVIEW
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II Jewellery Business
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Jewellery – Market & Industry highlights
•Size of market: Rs 65,000 crores (~ US$ 16 billion)
•Urban market is about 38% of this base
•Branded jewellery is less than 5% of the overall market
•Importance of jewellery to Indian consumers –
Gold is seen as auspicious, an investment, for adornment….
•Product mix: largely plain gold 22kt, with gem set
jewellery constituting less than 10% of the market
Players
Market
•Key players: Fragmented market, mainly retailer driven.
•Most retailers are unorganised and stand alone
•Absence of hallmarking
•Tanishq - the first branded jewellery player (1996)
•Increased investment by industry bodies (DTC, PGI, WGC) is spurring rapid growth of the branded jewellery market in India
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TANISHQ TODAY – A BRIEF OVERVIEW
• Strongest and most aspirational brand in the jewellery category• Awarded most admired brand and Retailer of the year by Images Fashion• Enjoys a market share of over 40% in branded jewellery
Network• India’s only national jewellery retailer• 101 stores in 70 towns – prime high street locations• Many of these stores are run by franchisees
CustomerBase
• 1.5 million customers shopped at Tanishq last year
Brand
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• Rapid growth of 40% p.a. over the past three years• Rs. 1252 crores during the latest financial year• 58% of the Company’s revenues
Profits
Impressive turnaround• PBT (2004/05) - Rs. 20 crores • PBT (2005/06) - Rs. 35 crores • PBT (2006/07) - Rs. 77 crores
ROCE
ROCE exceeds Cost of Funds • ROCE (2004/05) - 29%• ROCE (2005/06) - 34%• ROCE (2006/07) - 61%
Revenues
TANISHQ TODAY – A BRIEF OVERVIEW
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Gold Plus :Size of the opportunity
Semi-urban and rural market estimated to be as much as 50% of the total : Over Rs 30,000 crs.
Highly value conscious consumers, buying traditional jewellery
Very fragmented industry with under-karatage still prevalent in many parts of the country
A new business model and a new brand to exploit this opportunity
Sales of Rs 95 crs in 2006-07 and almost Rs 140 crs in first nine months of 2007-08
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III INTERNATIONAL OPERATIONS
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INTERNATIONAL BUSINESS
One of India’s first companies to market a consumer brand overseas.Now present in 26 countries outside IndiaAmong the top 3 brands in some Asian countriesRanked No.3 amongst the top Life style Brands in the watches category by Business Today ( Oman) for the third year in a row Selling 650k watches annually with increasing presence in jewellery. Total export sales of over Rs 100 crores in 2006-07
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IV Precision Engineering Business
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Precision Engineering Business
RationaleLeveraging Engineering capabilitiesB2B business – balances risk of B2C businesses
The OpportunityIndia growing as a manufacturing base for precision products across industriesCost pressures and offset requirements guarantee a long term opportunityHigh cost of switching for customersLarge & growing market: The global market for precision engineering products addressable by Titan is Rs.135,000 cr.
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Current position: 3 segments 3 streams
Automotive
Aerospace
Medical
•Precision components
•Dash board instruments
•Sub systems
Market SizeRs 135,000 Cr.
Automation Solutions
Market SizeRs 575 Cr.
Domestic &International
Market.
Domestic MarketOnly
TSMGStudy
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Precision Engineering Business
The Customers
Eaton, USHamilton Sunstrand, USMicrotechnica, ItalyPratt & Witney, USSchlumberger, USFord, UKBosch, IndiaTimken, IndiaLucas, IndiaVisteon, US / IndiaTyco Electronics, IndiaStanadyne, IndiaTata Motors, IndiaTurbo Energy, India
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THE EYE WEAR BUSINESS
Started in 2004-05 by marketing Sunglasses under the Fastrack brand
Targeted the youth segment
Achieved a sales turnover of over Rs 25 crores in 2006-07
Pilot project for Prescription Eyewear started in Q4 2006-07
8 Titan Eye+ outlets as on 31 December 2007
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THE EYEWEAR MARKET – AN UNTAPPED OPPORTUNITY
Growth: Market has been growing in double digits ~ 15-20% per annum and likely to sustainDemand drivers: Urbanization, literacy, Penetration of TV & computers, Poor eye health due to lifestyles/ improper diet, etc.Margins: Overall mark ups of up to 300% exist between landed cost & retail price!
Incidence: 30% of population typically needs correction in vision ~ 300 mn
Users: 84mn users – which is about 25% of those who need the correctionConsumers change their glasses / frames once in 3 to 4 years on an average
Market size:•25-35 million units per annum•Rs 1500-1800 crs per annum
•Comparable to the watch industry•Repeat purchase is a regular feature from adolescence to old age.
Customer lifetime value is very high•Almost everyone over 40 yrs needs correction.
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OUR BUSINESS PROPOSITION
Product / Service Offering:
- Eye checking, Optometry
- Range of frames - Titan & licensed brands
- Range of Branded Lenses
- Sunglasses – Titan, Fastrack & licensed brands
- Contact Lenses, Accessories
To enter as a retail brand – Chain of Stand Alone Stores
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WHERE WILL WE PLAY IN THE VALUE CHAIN
Frame and lens blank
manu-facturing
Wholesale distribution
Lens finishing
and assembly
RETAIL, SERVICE
Design and
Marketing
Mfg is not yet a desirable option
Focus on strengths and high margin areas: DESIGN, RETAIL, SERVICE & MARKETING
Tie up with reputed lens brands & labs
O U T S O U R C E
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Way Forward
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2007-08
Turnover to grow by over 40% over previous year, to cross Rs 3,000 croresPBT to grow over 50% to touch Rs 205 croresTwo important programmes launched: CustomerFirst which seeks to enhance consumer
experience at every interface with the company War on Waste that will improve productivity across
the Company
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Demographic Needs
Effect
Enablers
OutcomeConsumption of Lifestyle Items
CONSUMERISATION OF URBAN INDIA
Rising % of young
Population
Increasein Income
levels
ChangingSpendingpattern
Increase inNumber
Of workingwomen
Increase in Spending
power
RisingAspiration
levels
Organised retail market at Rs.97000 Cr by 2010 (CAGR 31%)
Increase inNumber workingurbans
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Seize the Opportunity ! A Company that endears itself to millions of Indians …
Will touch the lives of almost 14 million customers this year …
Based in Happening India
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Seize the Opportunity !Organised Retailing –The New Buzz
Our retail network comprising of
101 Tanishq stores226 World of Titan stores 20 Goldplus stores 14 Sonata stores117 Timezones and135 Watch Care Centres
… will account for over Rs 2300 crs of sales in 2007-08 making us
India’s largest speciality retailer
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Seize the opportunity ! Retailing Expansion 2007 – 08
WORLD OF TITAN
SONATA
FASTRACK KIOSKS
TANISHQ
GOLD PLUS
TITAN EYE+
207 TO 258
14 TO 20
10 TO 40
88 TO 106
10 TO 25
1 TO 12
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So what kind of company?
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By 2009, More than a billion $ company
2136
3000+
4000+
5000+
0
1000
2000
3000
4000
5000
6000
2007 2008 2009 2010
Income in Rs Croresi
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Multiple Businesses, Brands and Geographies
WatchesJewellery
Sun glassesPrecision parts
WatchesJewellery
Sun glassesEyewear
Precision parts
PRODUCTS
TITANSONATA
FASTRACKTANISHQ
TITANSONATA
FASTRACKTANISHQ
XYLYSGOLD PLUSTITAN EYE +
BRANDS
300 STORES IN INDIA
ANDPRESENCE
IN 26COUNTRIES
450 STORES IN INDIA
ANDPRESENCE
IN 37COUNTRIES
GEOGRAPHIES
7 SBUs7 PLANTS
WITH3500
PEOPLE
10 SBUs9 PLANTS
WITH4500
PEOPLE
UNITS
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Further information is available on www.titanworld.com
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THANK YOU